HOUSTON, Nov. 04, 2019 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE: SYY) today announced financial results for its 13-week first fiscal quarter ended September 28, 2019.
First Quarter Fiscal 2020 Highlights
- Sales increased 0.6% to $15.3 billion
- Gross profit increased 1.4% to $2.9 billion; gross margin increased 15 basis points
- Operating income increased 6.4% to $668.3 million; adjusted¹ operating income increased 7.3% to $741.9 million
- EPS increased $0.06 to $0.87; adjusted¹ EPS increased $0.08 to $0.98
“We saw improved financial results in the first quarter with adjusted operating income growth that was in line with our expectations, as we remain focused on accelerating local case growth and maintaining our strong track record of expense management,” said Tom Bené, Sysco’s chairman, president and chief executive officer. “As we look forward to celebrating our 50th anniversary this fiscal year, we remain committed to meeting the changing needs of our customers and supporting their continued growth.”
First Quarter Fiscal 2020 Results
U.S. Foodservice Operations
Sales for the first quarter were $10.7 billion, an increase of 2.5% compared to the same period last year. Local case volume within U.S. Broadline operations grew 1.5% for the first quarter, of which 1.4% was organic, while total case volume within U.S. Broadline operations grew 0.5%, of which 0.4% was organic.
¹Earnings Per Share (EPS) are shown on a diluted basis unless otherwise specified. Adjusted financial results exclude certain items, which primarily include restructuring costs, acquisition-related costs, and transformational project costs. Reconciliations of all non-GAAP measures are included in this release.
Gross profit increased 2.6% to $2.1 billion, and gross margin increased 2 basis points to 20.1%, compared to the same period last year. Food cost inflation was 2.9% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the meat, produce, dairy and poultry categories.
Operating expenses increased $9.0 million, or 0.7%, compared to the same period last year. Adjusted operating expenses increased $4.9 million, or only 0.4%.
Operating income was $861.4 million, an increase of $45.6 million, or 5.6%, compared to the same period last year. Adjusted operating income was $865.5 million, an increase of $49.8 million, or 6.1%, compared to the same period last year.
International Foodservice Operations
Sales for the first quarter were $2.9 billion, a decrease of 0.3% compared to the same period last year. On a constant currency basis, sales for the first quarter were $3.0 billion, an increase of 3.0% compared to the same period last year. Foreign exchange rates negatively affected International Foodservice Operations sales by 3.3% and total Sysco sales by 0.6% during the quarter.
Gross profit decreased 1.7% to $605.2 million, and gross margin decreased 29 basis points to 20.8%, compared to the same period last year. On a constant currency basis, gross profit increased 2.1% to $628.2 million. Foreign exchange rates negatively affected International Foodservice Operations gross profit by 3.7% and total Sysco gross profit by 0.8% during the quarter.
Operating expenses increased $1.7 million, or 0.3%, compared to the same period last year. Adjusted operating expenses decreased $13.9 million, or 2.7%, compared to the same period last year. On a constant currency basis, adjusted operating expenses increased $6.8 million, or 1.3%, compared to the same period last year. Foreign exchange rates positively affected International Foodservice Operations operating expense by 4.0% and total Sysco operating expense by 0.9% during the quarter.
Operating income was $54.8 million, a decrease of $12.0 million, or 17.9%, compared to the same period last year. Adjusted operating income was $99.0 million, an increase of $3.6 million, or 3.8%, compared to the same period last year. On a constant currency basis, adjusted operating income was $101.3 million, an increase of $5.9 million, or 6.2%, compared to the same period last year. Foreign exchange rates negatively affected International Foodservice Operations operating income by 2.4% and total Sysco operating income by 0.3% during the quarter.
Capital Spending and Cash Flow
Cash flow from operations was $171.6 million for the first 13 weeks of fiscal 2020, which was $99.6 million lower compared to the prior year period. Free cash flow¹ for the first 13 weeks of fiscal 2020 was $0.8 million, which was $169.9 million lower compared to the prior year period. The decrease in free cash flow was driven by a combination of an increase in working capital and higher capital spending during the first quarter. However, the company continues to expect strong cash flow for the full fiscal year 2020.
Capital expenditures, net of proceeds from sales of plant and equipment, totaled $170.8 million for the first 13 weeks of fiscal 2020, which was $70.3 million higher compared to the prior year period.
The full report may be viewed here.
